Unemployment, illegal immigration and government waste

http://www.msnbc.msn.com/id/38034014/ns/business-stocks_and_economy/

The reports are not good for employment or the unemployed who've been receiving benefits. If congress stalemates on extended benefits, there could be an increase in American citizens accepting lower pay work, but will they be able to compete with illegal immigrants? And, if they can't, is this going to cause more tension regarding the illegal immigration issue? Likely so.

If congress can find enough waste to cut, they can justify extended unemployment benefits, but is this good in the long run. The longer people can draw unemployment the less the urgency will be to find any job available and accept lower wages. Either way, the prospects don't look promising for the economy.

America is running into a wall of debt that weakens the usual government/Keynesian remedies for increased unemployment. Until we deal with the fundamental problems, nothing is likely to improve. The prospect of increased taxes, higher healthcare costs for employees and more regulation has frightened companies and caused stagnation. A full-bore campaign to implement free market principles, and a pledge from government to leave the economy alone, is vitally needed in order to turn the economy around. As I've written here many times, with the shaky global economy, if America once again became the haven for a free market, we'd attract investment from all over the world, but it will require gaurantees of a hands-off government policy and extremely low taxes. It will require a campaign promoting America as a free market haven. This is not likely to happen any time soon.  

The Marketplace of Ideas

There's no turning back the Information Age. All over the world technology is breaking down walls and information is slowly weakening the hold authoritarians have over their subjects. In America the flow of information is healthy in spite of old-media types and government officials who prefer a tighter control over information the public consumes. In America the only weapon against the free flow of information is to marginalize those who are disseminating ideas which threaten the political class.

These attempts to marginalize viewpoints which reject modern liberalism's support of American-style statism are puny and they'll backfire as the public becomes more educated, and the veil of elite wisdom is pulled back to reveal the base desire to protect the status quo of power and control. Some modern liberals are afraid that a populist uprising could create a return to racism, Christian fundamentalism, unfettered capitalism and oppression of minority groups. Unions fear the loss of power and a privatization which will destroy the progress accomplished through government protection.

The educated are sickened at the thought of the empowerment of the ignorant. There's an unspoken rule that the wise are best suited to run things, and the government is the best vehicle for such regulation which forces society to do that which is best for everyone. The common individual hasn't reached the point of insight to understand the common good, and, besides, they enjoy shopping at Wal-Mart, so what can they really contribute?

Of course, I'm exaggerating, but not much. The reality is that, slowly, America is absorbing the information presented in the Marketplace of Ideas, and this is changing the game. When Glenn Beck recommended Hayek's Road to Serfdom it became a number one seller. More books are being bought dealing with American history -- conversations are being held all over the country regarding the relationship between the State and the private sector. Because this greater flow of information coincides with Obama's presidency, many on the left make the claim that there's a racist motive for the current dissent, but this is simply one of the means of marginalization. The American public has pretty much accepted liberal social views -- this is not a battle over social issues, it's a battle between statism and a free market.

Much can be learned from the Tea Party movement, but most liberals choose to ignore the impact and underlying motivations. Too many modern liberals have become invested in government as a means to deal with societal problems and control the perceived problems of capitalism. Many have a selfish investment as a means of protection, such as unions and other special interest groups, especially at the leadership positions where livlihoods depend on government protection and subsidies, but many more are sincerely concerned with creating a better society and helping those they perceive as oppressed by the powerful, connected, fortunate, privileged rich.

Actually, a free market is the best means to prevent powerful cartels of protected corporations and wealthy power-players from rigging the game, but modern liberals can't seem to accept this -- their intellectual investment in benevolent government is too great to overcome -- it would seem traitorous to flip on such a position and admit that the State, in partnership with favored corporations, is the contributing factor to rigged game. 

But, we can at least start in the direction of considering different means -- one being, while in power, the Democrats could end all corporate welfare. This is why the Marketplace of Ideas is such an important aspect of America to preserve. Innovative ideas to utilize the private sector to its full potential will not arise within government -- it's against government's interest and instinct of survival. Empowerment of the private sector is a threat to government and everyone who depends on government, so the private sector has to be demonized, marginalized, kept at bay in submission to the powers above. We're wasting the talent and energy of millions of problem solvers with the growth of government dependence.

The Tea Party movement is a reaction to government over-reach and disempowerment of the private sector. People are saying they want to get involved to solve problems -- they want to preserve liberty and choice. The reaction of many modern liberals is to say -- "This is ridiculous - you have enough freedom, besides, only government can deal with problems which affect us all. Government is not out to get you -- it's necessary to ensure a fair, just society." When the public becomes more persistent, then fear sets in and those who defend government look for motives which could cause such dissent. Unfortunately, the modern liberal has chosen to explain the dissent with smears, accusations of racism and other tactics to marginalize the movement.

It's time to step back and assess the role of government and the potential of the private sector. There's overwhelming evidence that government intervention in the economy is paralyzing the market, and high unemployment is not going away any time soon. Even Europe is beginning to realize how damaging statism has been to their countries' economies. The American public is realizing we have to start limiting government power, yet, the modern liberal is stuck, defending the indefensible. The Marketplace of Ideas is working -- but we all have to consider the ideas without fear in order to benefit -- we can't afford stubborn denial and blind partisanship.

Permanent unemployment

The economy will eventually recover, but we may see a different America when it does. It will take industry a long time to recover psychologically from the prolonged recession and government intervention. Before, those in poverty were not very static -- there's been a small group of Americans in permanent poverty, but many in poverty were young people working their way up and moving to the middle class.

In the last few years industry has become more efficient and productive, requiring fewer workers to turn a profit and remain competitive and viable. Plus, wit all the government intervention, government is unsure of the labor costs. Most companies will have few incentives to hire for quite a while. We see this effect now with stubborn high unemployment and many people giving up looking for work. The unemployment benefits have been extended, and families are adjusting to the much lower income, supplementing the unemployment benefits with under the radar side-work, food stamps and rent subsidies. This income can become sufficient for many Americans to remove themselves from the taxable job market. If this happens like I suspect it will, we could have up to 25% of Americans permanently out of work.

The government, so far, shows no willingness to stop unemployment benefits, food stamps or rent subsidies. If people find this combination of income equal to lower middle class income, they'll have no incentive to change -- for the most part (some will be too ambitious to settle for lower-middle class). A liberal government might even see this as the route to redistribution of wealth and social justice, gradually increasing the benefits. As more people see this combination of benefits sufficient to get by and enjoy free time, it will become an attractive alternative to 8-10 hour workdays.

The middle class and wealthy will be taxed at higher rates to support the permanenty unemployed, placing a permanent drag on the economy and practically insuring we won't see high employment again, except the numbers will show high employment as more and more people are not counted in the job market.

I'm not sure if this will count as "poverty" if the benefits are counted as income, but it will create a divided society and more resentment in those paying higher taxes. Anyone who doesn't think this will happen, doesn't understand human nature. Not all people will take advantage of the system, but 25% is not unreasonable. How this wil eventually affect our economy, I'm not sure -- if everyone adjusts economically and the 25% are basically hidden, it might last for a long, long time until it becomes such a burden politicans are forced to do something -- but that 25% will represent a large voting block who've grown accustomed to a certain lifestyle and inome, so who knows if there will ever be the political will to force people back into the workforce.

Disappointing employment report

No matter how many times the adminsitration and its lackeys try to pump up the economy, the employment numbers are still awful. Without census hiring, which has fallen under a cloud lately regarding firing and re-hiring to inflate the numbers, new hiring is anemic and many people are giving up looking for work. It appears we might have around 20% unemployment and underemployment for quite awhile, especially as companies become more efficient.

The new healthcare law, energy regulation proposals and pending financial reform wil also delay hiring  until employers know what their employee costs will be.  Europe is struggling and this doesn't help as exports will likely shrink along with tourism. If Obama bans oil drilling this will also contribute to unemployment, and it's unlikely new energy hiring will take place due to lack of a market for these energy resources.

Government can continue to hire, but if it's not productive work, it will only increase the debt and put pressure on higher taxes -- higher taxes will hurt private sector hiring.

The administration is going in the wrong direction -- we get more evidence everyday. Mr. President and congress -- release the private sector -- it's the only way to turn around the economy.

As usual, political pundits get it wrong

For all the complaints political pundits have regarding simplisitc thinking on the right, the pundits are the most simplisitc thinkers in the entire political realm. Over and over, one pundit after another, they blame unemployment and anti-establishment sentiment for yesterday's election returns.

Unemployment is a symptom of bad economic policies which shackle the market, and incumbents don't exist without context. The opposition to incumbents and establishment politicians is a reaction to a broken system and corruption. The voters don't care how long someone has been in office, they only care that integrity has been lost in a corrupt system.

Unemployment doesn't exist without context, either. Jobs are hard to find because government intervention has scared the hell out of businesses and they're afraid to make a move when they don't know the rules of the game and how the next intervention will affect their bottom line -- plus, government spending is sucking up capital which would could be used for private sector investment.

The public, in large part, wants a limited government which spends according to what a limited government would need to operate effectively, and they want a free market which creates opportunity and ecoomic growth. So, just saying jobs and establishment over and over misses the underlying concerns.

The pundits give the impression that if employment picks up, everything will be fine. This is not true.

Update on Wednesday, May 19, 2010 at 11:58AM by M. Farmer

This helps make my point -- http://jacksonville.com/opinion/blog/403455/david-hunt/2010-05-19/riding-rand-paul-wave